work force

U.S. unemployment drops to 8.3%

BLOOMBERG NEWS FILE PHOTO AARON M. SPRECHER
A JOB seeker fills out an application during a career fair sponsored by National Career Fairs in Houston, Texas.
Posted 2/3/12

WASHINGTON - Employment climbed more than forecast in January and the U.S. jobless rate unexpectedly fell to the lowest in three years, casting doubt on the Federal Reserve’s pledge to keep interest rates low until late 2014.

The 243,000 increase in payrolls was the most since April and exceeded all forecasts in a Bloomberg News survey, Labor Department figures showed in Washington. The unemployment rate dropped to 8.3 percent, the lowest since February 2009.

Stock futures and bond yields jumped as the report fueled optimism the economy is weathering the European debt crisis. The data may boost President Barack Obama’s re-election bid and come one week after Fed Chairman Ben S. Bernanke said the economy wasn’t growing fast enough to push unemployment lower.

“Further Fed stimulus is probably limited at this point,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, N.C. “The drop in the unemployment rate has to be very, very positive from the Fed’s point of view.”

The contract on the Standard & Poor’s 500 Index expiring in March rose 0.9 percent to 1,334.0 at 8:47 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 1.91 percent from 1.82 percent late yesterday.

The median projection in the Bloomberg survey called for a rise of 140,000 payrolls after an initially reported 200,000 gain in December. Estimates of the 89 economists ranged from increases of 95,000 to 225,000. Revisions added a total of 60,000 jobs to payrolls in November and December. The Labor Department revised December’s gain to 203,000.

Broad-Based Gains

The gains in employment were broad-based, including manufacturing, construction, temporary help agencies, accounting firms, restaurants and retailers. The number of industries showing job gains climbed to 64.1 in January from 62.4 a month earlier.

Factory workers put in an average 41.9 hours of work each week, the most since January 1998, while overtime hours climbed to the highest since March 2007. Manufacturing payrolls increased by 50,000 in January, the most in a year.

The unemployment rate, derived from a separate survey of households, was forecast to hold at 8.5 percent, according to the survey median. The drop in the jobless rate reflected a 381,000 decrease in unemployment at the same time 250,000 Americans entered the labor force.

Private Payrolls

Private payrolls, which exclude government agencies, rose 257,000 in January after a revised gain of 220,000 the prior month, marking the biggest back-to-back gain since March-April. It was projected to climb by 160,000.

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